Saving enough money for deposit can be one of the biggest challenges for first home buyers. To help you get into your own home sooner, you might be able to access some of your super.
The First Home Super Saver scheme allows you to make voluntary contributions to your super to help save a deposit for your first home.
You can withdraw this amount, plus investment earnings when you are ready to buy a home.
Key points:
The scheme can help you reach your deposit goals much sooner. This is because it taps into super’s tax breaks, making it easier to save.
Making extra voluntary before-tax contributions can also help reduce the tax you pay on your income. This means you keep more of your money. And because it’s in your super, you can’t dip into it until you’re ready to buy your first home.
To access some of your super early as part of the scheme, you need to meet these government conditions.
If you’ve lost ownership of your home due to financial hardship, you might be able to apply for the First Home Super Saver scheme. Hardship includes losing ownership due to:
The scheme lets you make extra voluntary super contributions to save for your first home. You can later withdraw the money, plus investment earnings on the deposited amount, to help pay for your first home. The money you contribute to your super grows based on the super investment mix you’ve chosen.
The scheme can also offer significant tax and financial benefits:
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| First Home Super Scheme advantages | Benefit to you |
|---|---|
| The money in super can’t be touched until you’re ready to use it for a deposit. | This removes the temptation to dip into your savings. |
| The money you deposit into a bank account could be taxed at a higher rate, up to 47%. Contributions to super are usually taxed at 15%. | This means your money can go a lot further and stays invested in the markets. |
There are rules on the amount of money you can contribute each year and the type of contributions.
It’s simple to set up a salary sacrifice or make an after-tax contribution to your super
Case study: Let's see how it will work
Michelle earns $60,000 a year and wants to buy her first home. Using salary sacrifice, she contributes $10,000 of pre-tax income into her super account each year, increasing her balance by $8,500 a year (after the 15% contributions tax). After three years, she can withdraw $26,449 she has saved, including expected investment earnings.
Her withdrawal is taxed at her marginal rate (including Medicare levy), less a 30% offset, leaving her with $25,259 that she can use for her house.
Michelle has saved around $5,840 more for her deposit by utilising the First Home Super Saver Scheme than if she saved in a standard deposit account.
Assumptions:
You’ll have up to 12 months to sign a contract to buy or build a property after release of your scheme funds. If you haven’t signed a contract within that time, you can:
The First Home Super Saver scheme funds form part of your assessable income in your tax return for the year the money is released to you. The ATO will withhold tax equal to either your usual tax rate minus a 30% offset, or 17% if your usual tax rate can’t be calculated. Investment earnings on your super are also only taxed at 15%.
The ATO recommends you request the release of your First Home Super Saver scheme funds around the same time as you apply for a home loan. Release of funds can take between 15 and 25 business days.
To access the First Home Super Saver scheme, follow these steps.
Excited to buy your first home but want practical information about organising finances and the costs involved?
Designed for first home buyers it covers the basics of buying a property, mortgages and borrowing money.
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